Morning Market Report

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The market is down 19 points. The Dow Jones was down 143 at 16,027 — the market opened lower and following an early rally, drifted lower throughout the afternoon. Volume was above average and the market traded in a 155 point range..

Technology stocks were again weaker and led the declines in global markets — Momentum stocks were heavily sold on high and questionable valuations. The same large US companies were affected including Amazon.com -1.7%, Google -1.9%, Netflix -2.4%, and LinkedIn -2.5%.

US Earnings — JP Morgan Chase reported a 19% fall in first-quarter profit, weighing on both European and US markets. But Wells Fargo reported better-than-projected net profit and lowered provisions for bad loans.

US Economic Data was generally good — Consumer sentiment rose to 82.6 in April from 80.0 previously, a nine-month high. Producer prices rose 0.5% and core price rose 0.6%, the most in nine months.

The Aussie dollar is weaker and is currently trading at US93.91c.

Base metals were generally weaker — with the exception of nickel up 1.88% and copper up 0.08%.

Iron orefell US$2.20 to US$116.90 a tonne.

STORIES

Coca-Cola Amatil (CCL 954c) — Shares were sold off 14.56% last Friday after the company issued a profit downgrade. It expects earnings to fall in the first half due to weakness in the Australian and Indonesian beverage markets. They has flagged a 15% fall in EBIT. They also expect challenging trading conditions to continue. It’s been almost a year (8th May 2013) since CCL shocked the market with a profit downgrade sending shares down 10.52%. Since then the share price hasn’t recovered and has continued tracking downwards. A few broker reports out today, surprisingly most of them saying the downgrade is disappointing but the stock is now trading at attractive levels.

CSL (6857c) — Deutsche Bank has downgraded to a Hold from Buy recommendation with a target price of 7320c. The downgrade came on the back of the threat from new extended half-life haemophilia therapies. They don’t see many catalysts going forward that can provide above-market growth in the next couple of years.

Kathmandu (KMD 344c) — Deutsche Bank has a Buy recommendation with a target price of 348c. They say the retailer is ‘well placed to benefit from a broad recovery in retailing conditions.’ They have undertaken a push into UK and Deutsche have upped their forecasts.

Glencore Xstrata has sold its interest in the Las Bambas copper mine (Peru) to a Chinese company for $US 6 billion cash deal, making it one of China’s largest deals in recent years.

Nickel hit a 13-month high on Friday at $US 17,495 a tonne, its highest since February 20 last year. The rise came on the back of Indonesia’s ban on ore exports which kept market supplies tight. Stocks with Nickel exposure – SIR, MBN.